Matt Martin and Tyler Florell work to install a water main and a fire line at a construction site Thursday on West Prospect Road in Fort Collins. / Erin Hull/The Coloradoan

Written by

Coming out of a few tough years, business for some local construction companies has picked up, but as contractors look to hire more people for more projects, they’re also facing new challenges.

With many skilled workers recently retiring, others choosing jobs in out-of-state oil fields and some leaving the construction industry entirely during the recession, a labor shortage in the industry could end up leading to higher project costs and lower quality results.

“There’s a huge shortage of skilled labor in Northern Colorado and in other areas of the United States, as well,” said Bob Peterson, the owner and president of Fort Collins-based Associates in Building & Design and the future 2014 chairman of the Northern Colorado Home Builders Association Board of Directors.

According to Peterson, one of the main reasons for the workforce decrease was the lack of demand for laborers during the economy’s downturn in 2009.

“I could say there were over 800,000 construction industry jobs lost during the recession, so a lot of those people switched jobs,” Peterson said.

“We’re frankly back in teaching mode, which is OK,” he said, adding that people entering the workforce need to be properly trained and have the right skills. “...We have got to create that skilled labor model until either some of those people come back or we get enough people entering the skilled labor force. The unfortunate result right now is that costs go up.”

Windsor recently saw the effects of this trend when an estimate for the town’s future 3-million-gallon water tank ended up being about $1 million lower than the actual cost of the project.

In August 2012, the town contracted Bates Engineering, a Lakewood-based engineering firm specializing in large-capacity water storage tanks, to design the tank. The original 2012 cost estimate from the firm was $2.3 million, according to a Windsor town memo. But one year later, when bidding for contractors opened on Nov. 21, the bids rolling in ranged from just over $3 million to just under $3.9 million.

(Page 2 of 3)

When talking to town staff, Bates Engineering officials said the 2012 cost estimate was largely based on a tank bid in 2009, which didn’t reflect construction costs of that time or in the future. The firm also attributed the low estimate to the challenges contractors are facing with the shortage of labor, saying that with out-of-state oil industry work and major in-state public works projects, construction costs have increased, along with a shortage of building materials.

“What I had talked about with a subcontractor that works on most of our projects is that they’re having a hard time hiring skilled iron workers and that, from what he understood, there’s a lot of opportunities up in the Dakotas on the oil patch and they get paid much higher,” said Bob Bates, owner of Bates Engineering. “In his opinion, that was going to affect the type of projects we do, as well.”

In addition to jobs in the oil and gas sector, Bates said there are also major in-state projects that have attracted skilled workers, including the construction of the East Rail line, a 22.8-mile transit corridor that will run between Denver’s Union Station and Denver International Airport, according to the Regional Transportation District of Denver.

“And then when you combine that with metro’s wastewater project up in Brighton, it just makes a lot of competition for iron workers and laborers and carpenters,” Bates said.

Locally, Fort Collins construction company Heath Construction is focused on attracting young professionals through social media activity and also by maintaining a strong association with Colorado State University’s construction management program.

By reaching out and making people aware of construction as a professional industry with good careers, Heath Construction owner Randy DeMario said he hopes to see more people enter the workforce and allow companies to have enough laborers to keep construction standards high.

“Without good talent, companies will not be able to grow to the degree that the market is growing, so it’s a really big problem, but it’s a good problem to have,” DeMario said. “The industry is growing, and the economy is getting stronger and so is consumer and business-owner confidence.”

(Page 3 of 3)

“The problem is there’s more growth than there are people,” he said, adding that the biggest increase he’s seen has been on the multifamily and residential construction side as opposed to more commercial work.

Like Bates, DeMario said many skilled laborers not in the construction industry often can be found in the oil and gas sector, which has seen consistent growth and boasts high-paying wages.

“It’s difficult work, it’s long hours and it usually means time away from home,” DeMario said of the oil and gas industry. “But as Colorado has seen in the past, oil and gas is high-paying work and the workers in the construction industry who are paid well get paid better to go into the oil and gas sector.”

“The growth in oil and gas is expected to continue,” DeMario added. “The challenge is not going to end, so as an industry, we have to solve it and try to bring more people into construction.”

According to Doug Flanders, director of policy and external affairs for Colorado Oil and Gas Association (COGA), oil and gas activities recorded an average wage of $74,811 in 2012, which is 48.6 percent higher than the average wage in Colorado. The industry also supports about 111,000 jobs in Colorado, offers good benefits and saw steady job growth when other industries such as construction did not, Flanders said.

“Across the board, when it comes to employment in the industry, we’re seeing upticks in folks interested in the industry because of higher wages and the extra activity in other states and in Colorado,” Flanders said.

But, it’s also cyclical, he added, saying the industry does see its own shortfalls and upticks in certain areas.

“As other industries begin to come out of the recession, you might see some people leaving the oil and gas sector and going into other areas,” Flanders said.

For Peterson, the first thing construction companies will need to have to rebuild their workforces is patience.

“I think it’s going to take two or three years to rebuild and reload and have really good quality skilled labor again,” Peterson said. “Unfortunately, I think there will be a lot of unskilled labor entering the market that quality-oriented builders who are committed to this industry and who weathered the recession will have to be careful about hiring until we get that skill back.”

Echoing Peterson’s thoughts, Flanders emphasized the importance of good, experienced workers in all industries — including both oil and gas and construction.

“They’re called skilled laborers for a reason,” Flanders said. “They have a skill set that is needed in our economy, and they’re a valuable resource for all of us.”